What is the before-tax present worth of the extruder

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Question: The XYZ Corporation is planning to purchase an extruder. The purchase price of the extruder is $350,000. XYZ plans to make a down payment of 25% of the first cost of the extruder and to make a 7 year, 10%, yearly payment loan for the rest of the first cost of the extruder. XYZ believes that the extruder can be sold for $75,000 at the end of its 15 year service life. The new extruder will increase XYZ's annual income by $90,000. Maintenance and operating costs are expected to be $4,000 during the first year and to increase by $1, 200 each year. XYZ uses a before-tax MARR of 12% for its preliminary economic studies. What is the before-tax present worth of the extruder to XYZ?

Reference no: EM132088267

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